Jerome v. McCarter - 88 U.S. 17 (1874)
U.S. Supreme Court
Jerome v. McCarter, 88 U.S. 21 Wall. 17 17 (1874)
Jerome v. McCarter
88 U.S. (21 Wall.) 17
1. The amount of a supersedeas bond as well as the sufficiency of the security are matters to be determined by the judge below, under the provisions of the twenty-ninth rule.
2. The discretion thus exercised by him will not be interfered with by this Court.
3. If, however, after the security has been accepted, the circumstances of the case or of the parties or of the sureties upon the bond have changed so that security which at the time it was taken was "good and sufficient" does not continue to be so, this Court, on proper application, may so adjudge and order as justice may require.
McCarter, the holder of a third mortgage, given by the Lake Superior Ship Canal, Railroad, and Iron Company on about 400,000 acres of lands -- pine lands, hardwood lands, iron lands, copper lands, and farming lands -- in Michigan, filed a bill in the Circuit Court for the Eastern District of Michigan to foreclose his mortgage. Subsequently to this, the company was decreed bankrupt and, one Jerome and another having been appointed its assignees, they were brought in by supplemental bill. On the 15th of June, 1874, the complainant got a decree of foreclosure.
The decree directed the sale of the canal, corporate franchises, and two land grants to pay $1,057,686, and also what might be due to one hundred and twenty bondholders whose debts were not included in the above amount.
The sale was to be made subject to prior liens of $1,500,000 and upwards (apparently about $2,000,000), so that with the decree of $1,057,686, the property, if sold, would, in order to pay all charges against it, have to produce $3,057,686, or at least $2,500,000. The prior encumbrances were carrying interest at the rate of 10 percent a year.
An appeal was soon afterwards applied for to SWAYNE, J., to operate as a supersedeas. A body of affidavits was produced on the side of the defendant, from men of business, men of science, and men of wealth to show an immense value in the mortgaged property, that its value far exceeded the amount of the decree and all prior liens, taking these at their principal sums and adding all the interest that had already accrued or would accrue during the litigation, and moreover that the property, from the anticipation of finding new mines on it, was rising in value. A body of
affidavits, nearly or quite as large and from a similar class of persons, was produced to show the contrary; the highest value given to the lands by any of these being $2,500,000. After hearing and considering these affidavits, an appeal was allowed by SWAYNE, J., to operate as a supersedeas, and the security fixed at $10,000, with two persons, named Wells and Crosby, as sureties. An appeal bond was given accordingly.
There was no allegation in making the present motion that there was any altered condition of the mortgaged property or of the sureties in the appeal bond. The case, however, was No. 655 on the calendar, the case last argued prior to the date of the motion having been No. 96, and it appearing that the present case would hardly, in regular course, come on to be heard for two years.
Affidavits by the same persons who had made them before, and affidavits by numerous other persons on both sides, were now produced and laid before the court; there being now, as before, vast differences in the estimates of the property mortgaged, and as to whether it would be found more valuable than it now was or not.
To understand the arguments in the case, it is necessary to advert to certain statutes and to the twentieth rule of this Court.
The twenty-second section of the Act of 1789, [Footnote 1] confers upon this Court the power to review the final judgments and decrees of the circuit court by means of a writ of error, and the judge who signs the citation is directed to take good and sufficient security from the plaintiff in error, "to answer all damages and costs if he fail to make his plea good."
The twenty-third section prescribes the mode by which this writ of error may operate as a supersedeas and stay execution, and when the writ so operates, this Court is directed, when they affirm the judgment or decree, to adjudge to the respondent in error, "just damages for his delay, and single or double costs, at their discretion."